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Why This Group is Trying to Stop Amazon from Buying Whole Foods

Monday, July 17, 2017  
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Marc Perrone, president of the United Food and Commercial Workers International Union, sees Amazon the way some Rust Belt workers see global trade — as a threat to American jobs.

 

So on Monday, Perrone plans to file a complaint to the Federal Trade Commission, arguing that letting Amazon buy Whole Foods would trigger a wave of store closures and eventually quash customer choice.

 

“Amazon’s reach will ultimately reduce the number of grocery competitors that consumers can choose from,” he wrote in the complaint. “Regardless of whether Amazon has an actual Whole Foods grocery store near a competitor, their online model and size allows them to unfairly compete with every single grocery store in the nation.”

 

Last month, the e-commerce giant announced plans to purchase the upscale grocer for $13.7 billion, a move that would net the company more than 450 brick-and-mortar stores across the country.

 

A spokesperson would not comment on the complaint, but said Amazon did not intend to replicate its Amazon Go model, which relies on sensors instead of cashiers. (Amazon.com chief executive Jeffrey P. Bezos owns The Washington Post.)

Perrone, however, said he is worried the deal would give the Web titan an “unfair advantage with suppliers,” which could put small and medium shops out of business and hike up prices for shoppers — a consequence of limited competition, he said.

 

The company’s AmazonFresh service, which is separate from the Whole Foods deal, delivers groceries to customers in Seattle, New York, Boston and D.C., among other markets. (Amazon has not released the number of subscribers.)

 

“I’ve got concerns, and our organization has concerns, about what technology does and at what cost to society,” Perrone told The Washington Post. “We don’t want to be Luddites about technology, but we’ve got real concerns about what happens to America in the future.”

 

The United Food and Commercial Workers International Union has roughly 1.3 million members across North America, working for retailers at a typical wage of about $18 an hour, including benefits. Members are employed at stores such as Kroger, Safeway and Albertsons. Whole Foods, for contrast, isn't unionized.

The union, Perrone said, is worried that America’s shifting shopping preferences will spark a crisis in its industry the same way automation and trade with China and Mexico has wiped out factory work.

 

Seventeen years ago, less than a quarter of Americans had ever shopped online, Pew data shows. Today, 80 percent do.

 

As of Friday, there have been 5,369 announced store closures in the United States, up 162 percent from last year, according to data from Fung Global Retail and Technology, a retail think tank in New York.

 

Grocery stores lost 11,000 jobs since last year, and supermarkets are down 3,000 workers from this time last year. That's partly because online food shopping has crept into the market, taking away a small slice of business so far — but one that is expected to keep growing, said David Livingston, a grocery chain analyst in Wisconsin.

 

It's too early too tell whether or how Amazon could transform the Whole Foods model or take it online. The deal has not yet been approved.

“The biggest thing the Amazon and Whole Foods deal has done is creating uncertainty,” Livingston said.

Labor unions aren't the only people nervous about the potential marriage.

 

Democratic lawmakers on Capitol Hill have raised issues with the merger. Last week, Rep. David N. Cicilline (D-R.I.), the ranking Democrat on the House’s Judiciary Committee's antitrust panel, requested a hearing on the deal. In a letter to his colleagues, Cicilline said the panel should explore how such a move would affect the future of grocery stores and prices.

 

Some farmers have expressed concern that Whole Foods under Amazon’s rule could shift its sourcing emphasis away from small, local producers — a tradition the store has baked into its brand but has admitted is more expensive than buying supplies from larger outfits. (An Amazon spokesman told The Post that Amazon “remains committed” to Whole Foods’s producers.)

 

The FTC and the Justice Department are tasked with reviewing transactions worth more than $78 million that would affect commerce in the United States. Under the law, either agency can pursue legal action to block deals they believe would strangle competition.

That last happened two years ago, when the FTC argued that Staples’s proposed merger with Office Depot would violate antitrust laws by hampering competition for office supplies. Last May, the companies ditched the deal.  

 

Jon Leibowitz, a former Democratic chairman of the Federal Trade Commission, said the agency has a duty to challenge any deals that could end up hurting shoppers.

 

“Think about the Amazon business model — that’s typically bringing down prices and enhancing innovation, which is a benefit to consumers,” said Leibowitz, now a partner at the law firm Davis Polk. “But the FTC is a very professional agency, and they’re going to pay attention to any substantive concerns raised by outside parties.”

 

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